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NEW DELHI: The Rs 1,000 crore tax-free bond issue of Indian Renewable Energy Development Agency (IREDA), the first issue of Calendar 2016, sold like hot cakes as soon as it opened for subscription on Friday.

Data available on the BSE website showed that the issue has received bids for 5.07 crore bonds, or 5.07 times the 1 crore paper up for sale, on the first day of listing.

The breakup of the bids was not available at the time of writing this report. The bond offers between 7.28 per cent and 7.68 per cent for tenures ranging from 10 to 20 years compared with 7.60 per cent offered on the NHPC issue last month.

There is a 20 per cent quota limit for qualified institutional buyers (QIBs), corporate and individuals and HUFs subscribing to bonds worth over Rs 10 lakh. These investors come under Categories I, II and III, respectively.

The rest 40 per cent of the issue will be offered to retail investors, who include individuals and HUFs bidding for bonds worth up to Rs 10 lakh. This set of investors comes under Category IV.

While the Mini-Ratna company is looking to raise Rs 1,000 crore from the issue, it may consider retaining oversubscription of up to Rs 716 crore, aggregating to Rs 1,716 crore, the company said.

In such a case, the allocation will be made on a proportional basis. The total offering to retail investors, in this case, will increase from Rs 400 crore to Rs 686.40 crore.

QIBs, companies and HNI investors (Categories I, II and III) are being offered 7.28 per cent return over a tenure of 10 years. Retail investors (Category IV) would be offered 7.53 per cent for the same maturity.

On bonds maturing over 15 years, retail investors would get 7.74 per cent return, while the rest three categories would get 7.49 per cent.

The 20-year bonds would offer a return of 7.68 per cent to retail investors, while the other three categories will get 7.43 per cent. Each bond is valued at Rs 1,000 and investors have to bid for a minimum of five bonds. The issue will close for subscription on January 22.

Tax-free bond issues of public sector companies have witnessed huge interest among both retail and non-retail investors in recent times. Just like bank fixed deposits (FDs), tax-free bonds offer fixed interest to subscribers.

Last month, the NHAI bond issue got subscribed 22 times. Another bond issue by IRFC was oversubscribed 10.84 times. The issue was sold between December 8 and December 10, and got oversubscribed within a few hours of its opening.

The NHAI bond issue got subscribed 22 times. The bond issue by IRFC was oversubscribed 10.84 times, BSE data showed. The bond was sold between December 8 and December 10, but got oversubscribed within a few hours of its opening.

An offering from NTPC had witnessed a similar demand, clocking 11 times bids on the opening day itself and forcing the state-run power company to pre-close the issue on